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Startup = Growth

paulgraham.com

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Re: Startup = Growth

#211

Post by staunch »

nostrademons wrote: post #206
staunch wrote: post #102

> And the probability of a group of sufficiently smart and determined founders succeeding on that scale might be significantly over 1%. For the right people—e.g. the young Bill Gates—the probability might be 20% or even 50%. So it's not surprising that so many want to take a shot at it. Which means that even Bill Gates may have failed repeatedly at creating a successful startup. Just as in poker even great players wi…

Microsoft was Bill Gates's 4th venture. His first was consulting for CCC, finding bugs in their software in exchange for free computer time. His second was a payroll program in COBOL for Information Sciences. His third was Traf-O-Data, a startup with Paul Allen to make traffic counters. He'd already been programming for 6 years by the time he started Microsoft. Similarly, Facebook was Mark Zuckerburg's 3rd startup, a…

I think you're stretching a bit. Traffic-O-Data was Gates' first company and Apple was Steve's.

Re: Startup = Growth

#212

Post by staunch »

nostrademons wrote: post #205
staunch wrote: post #107

Earlier quoted context omitted.

Judged by growth rate it's not doing very well: https://duckduckgo.com/traffic.html

Isn't that circular reasoning: "Startups that constrain their growth..." If it's cited as an example of a startup that constrains its growth, of course its growth rate is going to be low. The real question is whether it stays in business and is a worthwhile investment for its founder.

And they took VC actually so it's a muddy example.

Re: Startup = Growth

#213

Post by danielweber »

outside1234 wrote: post #146
apinstein wrote: post #138

Earlier quoted context omitted.

We need a "slow startup" movement. pg's definition of a startup is just one kind of startup. I like to call it the VC startup. It's an organization whose goal is to succeed big or fail, and fast. This "charter" is driven by the needs of investors, and I get that. It makes perfect sense, and from where pg's sitting, it's the attitude he needs to have to successfully manage his portfolio. But it's not the only way to g…

After several "fast startups" I'm with you on this. We're doing it slow this time - no VCs, bootstrapped - and it is making a huge difference. Focus is on building a service that people will pay for so we can keep building the service instead of wasting tons of time doing the "VC money dance." It has helped tremendously in almost everything - more time with family - more time working on the product than on VC strokin…

It's nice, but you have to watch out for ending up in the dead zone -- a company that's hasn't failed, but is just sitting there and staying in place.

It's really tough to find the right middle point, and it's probably different for every business.

Re: Startup = Growth

#214

Post by nostrademons »

edanm wrote: post #209
nostrademons wrote: post #203

Earlier quoted context omitted.

Interesting observation, but I'd extend it to posit that maybe there is no "best" vehicle for hackers to become wealthy. It depends on the particular options available to you, and your "best" strategy is simply to consider all the options and pick the ones that seem most promising. In an efficient market, eventually you'd expect that you'd be paid the same amount for equal amounts of value created. In today's low-cap…

(You work at Google if I remember correctly, right?) Your situation with your employer might be more uncommon throughout the rest of the world as you think. Silicon Valley has a huge shortage of good hackers, but the rest of the world isn't quite as programmer friendly as all that. It's still very good for programmers, but not as good as some posts would have you believe. In any case, you are of course correct that t…

I suspect that that's because startups are the mostly highly-visible and well-publicized path to riches. The other ones are private, and usually if people don't have to reveal their wealth, they don't.

I also think that this phenomena of people making a lot of money through non-startup means isn't new, it's that publicity of it is. I have a friend whose dad worked for Wells Fargo in the 70s and then struck off as an independent computer consultant for big enterprises in the 80s and 90s. I asked her how much she thought he made when she was growing up, and she was like "Somewhere between $300-500K/year." And now that all eyes are on Wall Street, people are realizing that fund managers have made multi-millions a year since at least the 1980s. In hindsight, I also think about some of my family friends who owned local businesses - muffler shops, auto-body repair - and they had nice houses and vacation cottages and boats and expensive cars too, so I wouldn't be surprised if they were making in the multi-hundred-K to few millions per year. It just takes The Millionaire Next Door for people to realize that.

(Yes, I work at Google. My path is perhaps uncommon, but still very achievable for a lot of people, and I don't think that refutes my overall point.)

Re: Startup = Growth

#215

Post by gfodor »

dchichkov wrote: post #199
gfodor wrote: post #106

Earlier quoted context omitted.

I think you are just repeating my point and misunderstood my original description. There are people who invest in and work for startups, people who invest in and work for non-startups, people who invest in startups and work for non-startups, and people who invest in non-startups and work for startups. The interplay between time and money and risk and growth with these combinations became clearer to me because of this…

There are founders [owners] and investors. Fact that there are people who 'work for' startup is irrelevant to the interplay between the investment risk/return. True, one can be not-a-founder and work for startup. But this person would be just working for salary, and hopefully at market rate. So it is irrelevant to the investment risk/return equation. Now if one is not working at MARKET RATE - here we have some muddy…

Yeah when I said "work for" I was referring to founders or those working for significant equity.

Re: Startup = Growth

#216

Post by PeterisP »

photon137 wrote: post #158
garry wrote: post #157

Earlier quoted context omitted.

7% weekly growth may seem like BS, but it happens. The arbiter of this growth rate is a function of need and reach as PG said. To say it is BS while there is evidence the phenomenon is possible (having experienced it first hand and seeing friends achieve it for long periods of time) and that we even know the factors in it -- that is a self limiting belief indeed.

I am not terming that as BS because it's impossible - it's not. I'm saying it's not suitable for all businesses (it might be downright hara-kiri for some of them) - that alone should not disqualify them from being known or viewed as startups.

Why not? Words and terms are useful only if they mean something. It is not useful to mix "high growth startups" and "slow growth startups" in a single word meaning/term, as the practical difference is actually bigger than what they have in common. So PG is saying that "startup" means "growth startup", and young enterprises without the goal of explosive growth should be called something else, as they are significantly different.

Re: Startup = Growth

#217

Post by astrofinch »

tlb wrote: post #162
ryanwaggoner wrote: post #155

The discussion of expected return sounds good from an investors perspective, but founders have no diversification, so a 1% chance of $100m or 99% chance of wasting five years sounds pretty lousy. This is my biggest issue with the VC world from a founder's standpoint. The situation gets even worse once you throw the decreasing marginal utility of money into the mix, because now the expected value of $100m is not worth…

Yes, if you value money at log($) like microeconomics says you should, then you should start something less risky than a startup. As Charlie Stross's essay ( http://www.antipope.org/charlie/blog-static/2012/09/on-the-d... ) points out, there's another level. Elon Musk might get to retire on Mars. Bill Gates will probably cure malaria and several other big world problems. So if your goal in life is not just having eno…

See also: http://80000hours.org/blog/12-salary-or-startup-how-do-goode...

Re: Startup = Growth

#218

Post by loumf »

sreitshamer wrote: post #124

I thought 'startup' was defined as a business-like organization in search of a business model. Once it finds/chooses one, it becomes a business. The essay seems to define 'venture-backed startup'.

That's the Steve Blank definition. In the end of this essay, it seems to come around to that point of view.

You're committing to search for one of the rare ideas that generates rapid growth. Because these ideas are so valuable, finding one is hard. The startup is the embodiment of your discoveries so far. Starting a startup is thus very much like deciding to be a research scientist: you're not committing to solve any specific problem; you don't know for sure which problems are soluble; but you're committing to try to discover something no one knew before. A startup founder is in effect an economic research scientist. Most don't discover anything that remarkable, but some discover relativity.

Not exactly the same, but has the searching element.

Re: Startup = Growth

#219

Post by anovikov »

apinstein wrote: post #138
ChrisNorstrom wrote: post #94

- Venture Capital pouring millions into untried businesses. - The crazy valuations. - The recent complains of VCs that "Entrepreneurs aren't working on enough big ideas". It all actually makes sense now. It's all in the name of Big Risk = Big Reward style ventures. Especially after defining a "startup" as a company meant to grow rapidly and to massive proportions. Not necessarily a tech business. Not an online store…

We need a "slow startup" movement. pg's definition of a startup is just one kind of startup. I like to call it the VC startup. It's an organization whose goal is to succeed big or fail, and fast. This "charter" is driven by the needs of investors, and I get that. It makes perfect sense, and from where pg's sitting, it's the attitude he needs to have to successfully manage his portfolio. But it's not the only way to g…

I think the problem with business like this is that there are few of the niches where it can exist sustainably (and thus be worth money). You either eat out small niche quickly, or big players come and eat you for breakfast, or you specialize so deeply that you turn into a consulting company ('job'). So most of the time, you have to be 'pg kind of startup' or go bust (while there are quite a few exceptions). In most markets big enough where a business can exist for a long time you either have to grow fast VC-style, or someone else will do it.
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